This latest Seattle Funding Group closing is an excellent example of a lender short-pay and construction completion loan that had the necessary fundamentals and possessed a proper balance of the essential underwriting elements. The houses were in a solid, coastal location, they were all but completed with still-active permits, there was sufficient equity protection structured into the transaction, the experienced builder and sponsor was augmented financially by a substantial equity infusion…and at the re-set and much reduced debt level, everyone is positioned to profit from the execution of a sensible, market supported plan.
There are a host of indications that new residential in many sub-markets is approaching a level of stability, or at the very least, is within sight of the bottom of the current cycle. SFG is certainly seeing an increased activity level in quality financing requests secured by broken subdivisions, lender short-pays and construction completion. Inasmuch as that activity level directly corresponds to greatly reduced new home inventories, significant pricing realignments to local incomes, increasing buyer demand and the reentry of the public builders, we are finding sensible underwriting elements that didn’t exist a mere two quarters ago. While the best of these transactions very much remain sponsorship, location and price-point sensitive, they spell opportunity for the aware and professional brokers that are at the core of SFG’s continued success.